One thing I find time and time again is property investors dont understand inflation. Devaluation of the dollar does not make you more wealthy, it just means you need more dollars to have the same wealth.
Find yourself a chart showing inflation adjusted, or better yet adjusted with wages (as that is a better guide of inflation as they always bend the statistics) and the cycles will appear.
I think I have mentioned before house prices cost the same in 1976, 1986 and 1996 at around 3.6 years wages. Your chart is only showing you the devaluation of the dollar, which is not an increase in wealth. Having $35K in 1976 buys the same stuff as $150K in 1996.. so no increase in value, your just seeing the deflation of the dollar. If you invested for 20 years you would want to see a profit wouldnt you?
Thats why your interest rates go up higher in high inflation as you need to cover the inflation on your loan as well as pay it back with interest.
Now i know to a proeprty bull this is really hard to get your head around, but if you do you will realise house prices were always under 4 years wages on average.. it doesnt grow in value as the house isnt getting bigger.
If you can accept that truth, then you will understand why prices then doubling to over 7 years wages in just a couple years (at the same time as low interest rates and incentives to investors) was just a price rise from too much buy pressure from investors. and not real growth, which always collapses and why its a bubble.
